BW Communities

Rooting For Youth

Business World Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Despite the onslaught of camera phones - cameras are still being sold. Japan, the world's largest manufacturer, shipped nearly three times as many cameras in January as it did in the same month of 2003, when the camera phone was still in its infancy. And this trend is best demonstrated by Canon which has seen its camera business grow as the proportion of its overall sales to more than 25 per cent in the last 5 months. A falling rupee may be forcing Canon India to hike prices of non-camera products twice in six months, but that does not stop it from setting a target a 45 per cent rise in sales this year, based on its expectations from sales of compact cameras and digital SLRs. And pushing the sales are the youth of India. The market of India is the market of youth, according to Canon India Senior Vice-President Alok Bharadwaj. To expand on this youth connect, Canon India has been using cricket icon Sachin Tendulkar so long. This year, it also added Bollywood actress Anushka Sharma. The products, colour, form, marketing engagement, everything is youth centric. The company is big in social media too. It has built communities of Digital SLR users numbering 180,000! When it comes to taking serious photos, people usually go to camera makers like Canon. This leaves the compact point-and-shoot camera segment of the market vulnerable. In markets such as the United States and Japan, there's not many more people who want to buy one. On the one hand, this is eating into sales that Canon and others traditionally dominated. On the other, the ease with which photos can be taken on a phone is feeding an interest in taking better photos, expanding the middle of the market into a "pro-sumer" segment of devices which cost a bit more but offer the user options so far unavailable on the mobile phone: An optical, rather than digital, zoom, for example, better flash, and image stabilization. In India, however, the mobile camera does not yet effect the entry-level cameras. Also, they continue to be aspirational in India. Moreover, inspite of the 100 per cent growth trajectory for the digital cameras, only 5 per cent of the population is covered. With the growing affluence, Canon India plans to sell about 1.2 lakh of DSLRs, double of 60,000 sold last year. The DSLR market is estimated to be 2.5 lakh units, so thew aim is to be close to 50 per cent market share. Canon sells its products through image squares. From 65 Canon Image Squares in 42 cities, the company plans to take it to 300 squares in 150 towns by 2014. In the compact camera segment too it aims to have a bigger slice — 25 per cent — of the marketshare. Falling Rupee & Costlier Products Come June and Canon India will be increasing prices of its non-camera products by up to 5 per cent from June to offset the impact of the fall in rupee, the second price hike within six months. The price increase will be in the documentation products including laser printers, copier machines, inkjet printers and other IT peripherals segments which contribute half of the its turnover. It will take a decision on hiking the prices of cameras in July and if the rupee slide continues, may go for a hike in October. "We are looking at increasing our prices by 5 per cent in all products except the cameras from June 1. Since this is the peak season for cameras we don't want to create any impact on sales now," says Bharadwaj. "The rupee fall has made the environment very uncertain and a big challenge," he said. Admitting that price spike will impact sales at a time when already demand is slackening in the consumer durables space, he said: "We have decided to increase prices even if it means it slows a little bit of our topline, because the fall of the rupee is so steep." But despite the price increase in non-camera products and the resultant slackening demand, Bhardwaj expects Canon India revenue will grow 45 per cent this year and for this he is betting on an increasing share of compact cameras and high growth in digital SLRs. "Our total revenue should be Rs 2,200 crore this year, last year we clocked about Rs 1,525 crore, " he said. Last year, the company's sales got hit as the supply chains broke down in the wake of the tsunami in Japan and floods in Thailand. Incidentally, while 50 per cent of Canon India sales are to private consumers, 25 per cent goes to large enterprises like banks and corporates and 25 per cent to the government, both state and central. Despite the rising prices, Canon India expects an increase in the sales to governments as it gets more modernised and digitalisation takes place. Canon has great expectations from India. While the mid-term story may be disturbed, the long-term story remains intact.